Nasdaq OMX has stepped up its opposition to the planned merger between NYSE Euronext and Deutsche Börse and said the deal would "irrevocably destroy" competition in Europe's listed-derivatives markets, just as the European Commission nears a decision on the tie-up.

NYSE Euronext and Deutsche Börse announced their intention to merge in February, in a landmark agreement to create the world's largest exchange group. The exchanges secured shareholder approval for the merger in July and now await the outcome of a European Commission antitrust investigation into the proposed new group.

The probe, for which the Commission has sought industry feedback, remains the final hurdle to completing the transaction. It moved to an in-depth, phase II investigation last month and a final decision is expected on December 13.

In a response sent to the Commission earlier this month, and seen by Financial News, Nasdaq OMX said the merged group would "destroy" competition in derivatives trading and "exploit its dominance" over customers.

The exchange said: "The merged entity would drive competing platforms out of the market since it would suck in liquidity both for established products currently traded on other exchanges and importantly also for any new product launched by other exchanges in the future.

"Once competitors would have been driven out of the market, the merged entity would have complete freedom to exploit its dominance by extracting extra fees from customers."

It added that competitive forces would "be irrevocably destroyed if the merger was allowed to proceed".

The Commission is focusing its investigation into group's proposed dominance in listed-derivatives and clearing. The European derivatives market is an effective duopoly between NYSE Euronext's Liffe unit along with Eurex, the derivatives exchange jointly owned by Deutsche Börse and the Six Swiss Exchange. The German exchange agreed earlier this year to take full control of Eurex in January 2012.

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New entrants have been attempting to enter the European listed derivatives this year, to engender competition in the sector. Turquoise, the venue owned by the London Stock Exchange, launched trading in FTSE100 futures in June, while venues including Chi-X Europe, Bats Europe, Plus Markets and Dutch venue The Order Machine are also eyeing plays in the sector.

However, Nasdaq OMX said these venues would struggle in the shadow of the entity created by the NYSE-Borse tie-up: "The proposed merger will prevent venues like Turquoise not only from taking advantage of the small scope for competition on established categories of listed-derivatives but importantly in particular from competition on new categories of products moving onto exchanges under new regulation."

The stinging response is the second piece of feedback Nasdaq OMX has sent to the European Commission, but its view appears to have hardened. As part of the Commission's first phase review in July, Nasdaq told the Commission the tie-up would "establish a monopolistic situation" hindering competition.

The response comes the merger moved a step closer in August, following approval from the Committee on Foreign Investment in the US, a government panel that vets foreign takeovers of US assets. A green light from the European Commission's competition authorities remains the final hurdle.

Deutsche Börse rebuffed merger critics last month. It said: "The transaction will provide significant benefits for customers, issuers, and the European economy as a whole -- and many of these benefits will accrue to stakeholders directly."

NYSE Euronext and Deutsche Börse did not respond to calls for comment in time for publication.